SINGAPORE - Industrial and Commercial Bank of China (ICBC) began clearing offshore yuan trades in Singapore on Tuesday, in a move that will help the Southeast Asian city-state compete more aggressively in the growing market for financial products denominated in the Chinese currency.
"We can expect the range of RMB-denominated product offerings to expand, as regional corporates raise RMB financing through bond issuances and equity listings to tap on the strong investor base in the region," Monetary Authority of Singapore (MAS) managing director Ravi Menon said at a ceremony to mark the start of ICBC's yuan-clearing operations.
Companies have already begun selling yuan-denominated bonds to investors in Singapore, and the Singapore Exchange has announced that it is ready to quote, trade, clear and settle yuan-denominated securities, he said.
RMB is an acronym for the renminbi, which is another name for the Chinese currency. Currently, Hong Kong and Taiwan are the only places outside mainland China with designated yuan-clearing banks.
China named ICBC as the clearing bank for offshore yuan in Singapore in February, following an earlier agreement whereby the Singapore agreed to grant full banking privileges to the Singapore branches of ICBC and Bank of China.
MAS and the People's Bank of China (PBOC) last month doubled the size of their bilateral currency swap facility to 300 billion yuan (S$59.86 billion) from 150 billion yuan to allow the Singapore central bank to provide yuan liquidity to financial institutions operating on the island.
MAS and PBOC on Tuesday also signed a memorandum of understanding whereby the two central banks will cooperate closely in reviewing the conduct of yuan-denominated business and clearing arrangements in Singapore.